The Cocoa Barometer 2020 provides an overview of the current sustainability developments in the cocoa sector and highlights critical issues.

While previous Cocoa Barometers mainly focussed on social and economic issues such as living income, a stronger emphasis on environmental issues has been added to this edition.

Collaborations to drive sustainability in the cocoa sector are being developed at a variety of levels. Côte d’Ivoire and Ghana - together producing more than 60% of the global cocoa harvest - have implemented a $400 per metric tonne fee - the Living Income Differential (LID) - thereby raising farm gate prices by 28% (Ghana) and 21% (Côte d’Ivoire). This is an important step, though concerns remain at the lack of inclusion of other stakeholders in the development of these plans, including other cocoa producing governments, farmer organisations and civil society.

A small group of cocoa and chocolate companies dominate the market; each sourcing from hundreds of thousands of farmers, giving these companies immense market power. Most report significant progress in traceability of cocoa sourcing, though definitions of traceability differ. With a wider range of interventions at the sector’s disposal certification is no longer the only tool, and cocoa cannot claim to be sustainable merely on the basis of certification, although its infrastructure provides a framework by which many other necessary interventions can be rolled out.

Solving poverty is necessary because the wide range of challenges facing the sector will be impossible to tackle if farming households still live in poverty. This will require dealing with issues of power and political economy, such as price formation, skewed value distribution, the asymmetrical bargaining power of farmers, unbridled market concentration, and a lack of transparency and accountability in the sector.

Human rights violations in the cocoa sector are frequent, and include gender inequality, (the worst forms of) child labour, lack of education, (infant) malnutrition, insufficient health care facilities and sanitation, insecurity of land and tree tenure and rule of law, and labour rights violations for smallholders, workers and tenants.1.5 million children work in cocoa production in Côte d’Ivoire and Ghana. 95% of child labourers are exposed to the worst forms of child labour, such as working with dangerous tools or harmful pesticides. Investments and ambitions must be increased by several magnitudes, focussing on both remediation and prevention. Though current best-practice interventions might be able take some children out of child labour, root causes – such as farmer poverty, absence of or access to good schools and inadequate local infrastructure – must be addressed to solve the problem of child labour. Women do much of the work in cocoa, but are not recognised or remunerated accordingly, and are often excluded from ownership and participation in many aspects of life. Health care is often unavailable or unaffordable, and poverty leads to infant malnutrition and stunting, which can lead to a range of health disadvantages. Seasonal and hired workers are often overlooked in most human rights discussions.

Deforestation, climate change, the loss of biodiversity, the use of pesticides and the need for agroforestry are all environmental concerns that are coming to play in the cocoa sector. Cocoa production threatens rainforests globally, from West Africa, through Indonesia, the Amazon Basin, Colombia, and the Congo Basin. Deforestation leads to loss of biodiversity and habitat, and has tremendous climatological consequences, as rainforests are massive carbon storage systems and also function as ‘rain machines’ - their disappearance contributes to accelerating climate change. Monitoring systems are essential first steps that must be taken, as is forest restoration and protection of remaining forests.

Most challenges in the cocoa sector are systemic and require structural interventions at landscape, national, and global level. The core of the solution lies in the enabling environment. Mandatory approaches that lead to environmental and human rights due diligence regulation are needed. A solid and empowered position for smallholder farmers in global supply chains provide a bottom-up approach. Transparency would allow farmers and local civil society to keep their governments accountable, supported by due diligence and accountability systems, as well as open monitoring and traceability of the sector.

The report makes three key recommendations:

Regulation that changes the system, rather than penalising the farmers. Recognising that bad farming is not the problem but rather a symptom of a deeply unfair system, the report advocates for systems change and regulation that creates an enabling environment. Current forms of certification and farm-based standards increase pressure on farmers: instead, we need laws that hold the powerful accountable, rather than laws which demand that farmers change. Compliance criteria are imbalanced and need restructuring so that companies are held accountable to due diligence systems.

Effective partnerships between producer and consumer countries. If the answer is creating an enabling environment, we need partnership agreements between producer and consumer countries that facilitate and finance this. Processes that set partnerships in motion should be inclusive and deliberative, ensuring that civil society and farmer groups have a respected voice at decision-making tables. Data collected in the sector must be shared with farmers and their organisations to ensure informed decision making is possible.

Deliver on a fair price for farmers. The single biggest positive impact for farmers and incentive for farming sustainably is delivering a fair price for the cocoa they produce. Cocoa and chocolate companies must find ways to redistribute value along the supply chain so that farmers are guaranteed a living income.

The Impact of Covid-19

There have been several effects for cocoa farming communities globally, including an increase in the costs of daily living, for farming inputs, and for health care services (FCCI 2020). The closing of schools - although it was an understandable measure - put children at risk of exposure to child labour, even if temporarily. There has also been a marked decrease of the world market price, partly driven by a reduced demand for chocolate due to the pandemic. In that light, the timing of the introduction of the Living Income Differential in Ghana and Côte d’Ivoire has been very fortuitous. Though data is scarce, it is suggested that many farming communities saw a loss of current and future sales, payment delays, and experienced many other financial consequences.

For the longer term, the global recession caused by all the lockdowns and restrictions is expected to keep chocolate demand lower than originally expected, in a market that already was dealing with a structural oversupply of cocoa. This will cause downward pressure on global prices, with all the ensuing effects for farming households already in dire poverty.